Welcome to this our first edition of e-clientline in 2015. In less than two weeks we reach the end of the first quarter of 2015. The first three months have flown by – aided by living in SA – where we ‘never have a dull moment’!
The much debated electricity crisis, volatile Rand, subdued economic growth, low savings, a Government wage bill that continues to spiral and globally rating agents have South Africa’s sovereign rating on ‘negative’ watch.
It brings the wonderful Dr Seuss to mind “Don’t cry because it’s over, smile because it happened.” We hope the following articles will provide some explanation and guidance in dealing with the daily concerns of business.
Wishing you an interesting next quarter.
Grant Thornton South Africa
Reduction in UIF contributions
A significant reduction in the monthly UIF contributions payable by employers and employees was announced by the Minister in February in his national Budget Speech.
The current contributions are calculated as 1% of the first R14 872 of an employee’s remuneration (i.e. R148.72 per month). This will be lowered to 1% of the first R1 000, hence employers and employees will each pay a maximum monthly contribution of R10.
this change, once gazetted, will result in total annual contributions of R240 (i.e. R10 x 2 x 12 months) for the 2015/2016 tax year whereas previously the employee and employer would have paid annual contributions of R3 569.28 (i.e. R148.72 x 2 x 12 months).
Warning: Ignore 1 January 2015 tax changes at your peril
Three important changes came into effect on 1 January 2015, and will come into effect on 1 March 2015 which businesses should take note of, so that the consequences of these amendments for taxpayers are clearly understood.
The amendments relate to:
- Interest Withholding Tax (Interest WHT) – 1 March 2015
- Deemed dividend / donation in terms of Transfer Pricing – 1 January 2015 and
- Increase in Royalties Withholding tax rate – 1 January 2015
B-BEE deadlines and revised codes
The deadline to have your last certificate issued under the less onerous “old” Codes of Good Practice is 30 April 2015.
Start planning for your first scorecard under the Revised Codes of Good Practice, as you may find your existing level dropping and you will have to deal with higher thresholds and priority elements. Plan at an early stage, to ensure that measures are put in place to maintain your B-BBEE rating as best as possible.
Ensure your Enterprise (ED) and Socio-Economic Development (SED) contributions are made, prior to the close of the current financial period.
Find out how to qualify as an “empowering supplier”, if you do not, your certificate is null and void.
The vital importance of Empowering Supplier Status
With the implementation of the amended codes of good practice on 1 May 2015, comes the new concept of empowering suppliers. Do you know the importance of gaining this status and how to go about it? If you think you need to know more than you do, then you need to read more.
IASB takes steps to lighten the disclosure overload burden
The size of financial statements has grown significantly in recent years as disclosures have been added in the quest for greater transparency. Unfortunately this has led to concerns that the increased size of the notes to the financial statements has created a major burden for preparers, while failing to serve their intended purpose which is to help users understand the numbers in the financial statements.
We therefore fully support the Disclosure Initiative and its objectives. These Amendments will achieve limited, short-term improvements and are a good start to this larger initiative.
Global sharing economy
Poised to be every bit as disruptive as the internet revolution, is your business ready for the rise of the sharing economy?
With new businesses such as Airbnb, Uber and ZipCar exploiting technology to disrupt their markets, Steve Perkins – global leader for technology at Grant Thornton, tell business leaders to embrace the cultural and social changes that mean people are looking for access rather than ownership.
Navigating the changes to IFRS
The Grant Thornton International Ltd IFRS Team has issued the December 2014 edition of its publication ‘Navigating the changes to International Financial Reporting Standards: A briefing for Chief Financial Officers (CFOs)’. The publication is designed to give CFOs a high-level awareness of recent changes that will affect companies’ future financial reporting. It covers both new Standards and Interpretations that have been issued and amendments made to existing ones, giving brief descriptions of each.
Exchange control threshold amendments (with effect 1 April 2015)
In the recent budget review it was stated that rules and conditions continue to be modernised to attract investment and enable South African organisations to expand internationally, particularly into Africa.
The following threshold changes will take effect from 1 April 2015:
- authorised dealers may process corporate investment up to R1 billion per year, from R500 million previously, as well as the carrying forward of any unused allowance
- South African residents’ foreign capital allowance will increase from R4 million to R10 million per calendar year or upon emigration, or R20 million per family unit
- the subcategories under the individual single discretionary allowance are removed and the annual R1 million allowances may be used for any legal purpose abroad
- the dispensation for credit card usage, currently limited to individuals, will be extended to corporates.
These dispensations will be subject to the statutory requirements of the Reserve Bank and the South African Revenue Service. We will update you once further administrative details have been communicated by the Reserve Bank.